Top Three Reasons to Consider an Integrated Sustainability Report
As stakeholders press organizations to lead the change in society’s greatest problems, company executives are considering reporting their environmental and social performance as much as they report their business performance.
Thus, “One Reports” and “Integrated Reports,” which combine environmental, social and governance (ESG) criteria and financial results, are becoming popular. One of our clients, a VP of Integrated Communications, shared, “Integrating the annual reporting of performance and business strategy in a way that demonstrates this link between doing good and doing well is a natural step in corporate accountability.” One Reports help leaders take the next step in reporting on their corporate accountability in three ways.
1. Understand Total Performance
A primary benefit of integrated reporting is that it creates a single record of all strategies and outcomes. Thus, a company is better able to link a business rationale to ESG initiatives, while understanding and communicating the total value it creates — both financial and non-financial. For example, a large logistics company we work with reduced its fuel consumption as a part of its environmental sustainability strategy and in turn saw a significant reduction in fuel costs. This holistic information can help leaders assess performance, identify risks and opportunities, and make better management decisions. And, it demonstrates to investors that financial performance can be positively impacted by sustainable and responsible efforts.
2. Connect with all Stakeholders
An integrated report is a cohesive and efficient reporting approach that connects all stakeholders with one message. A One Report can lead internal teams to broader perspectives and better decision-making. In terms of Investor Relations, investors and capital providers can better understand your strategy and business model, which enhances efforts related to the Dow Jones Sustainability Index and other external analyses. Finally, integrated reporting can deepen engagement with external stakeholders who want to know how you address ESG issues.
3. Reflect Company DNA
When ESG is part of who you are, how you show up and what you stand for, it must also be part of your reporting. A One Report can demonstrate that ESG is not just a “bolt-on” strategy; but rather it is an integrated part of a business. This reinforces that your brand is credible and authentic, which is important to stakeholders who are watching to ensure that your actions are aligned with your intentions.
Before You Start
Though integrated reporting is becoming more popular, each individual company must determine if the format makes sense to them. Developing this kind of report requires internal cohesion, an understanding of GRI standards, material relevance of ESG issues to your business, and clear objectives about what the report will achieve. By combining your financial performance with your ESG performance in a consolidated report, you are also making a statement to your investors that you view your ESG efforts as integral to your business results. In addition, it’s important to consider timing and coordination. Annual Reports have SEC-driven requirements and deadlines that must be met. While sustainability reporting does not have such timing requirements, they often require massive coordination efforts between numerous stakeholders within your organization; and they rely on an often different data collection cycle than a financial report. More frequently, companies are working around this timing issue by issuing their 10K and Proxy according to SEC deadlines and including a financial summary in their integrated report.
An integrated report can be a great way to see how all aspects of your business are impacting each other, to provide one set of data that all stakeholders gravitate towards and to showcase that ESG is at the core of your belief systems. While it does have many benefits, it is important to consider the differences in timeline and cohesion necessary to report all of this data. In the end, the decision to move to an integrated report should be made based on a combination of your company’s strategy and its ability to deliver.
Editor’s Note: This post was originally published onOctober 14, 2020 and has been updated for comprehensiveness.
As President at Savage Brands, Bethany is known for forging powerful connections – connecting people to people and connecting companies with the fresh ideas that make their brands purposeful. In her recent book, "Get Your Head Out of Your Bottom Line and Build Your Brand on Purpose," Bethany conveys to business leaders the importance of leading with purpose.